Carmakers: Proposed law would hurt consumers

DOVER -- Auto manufacturers are warning that a bill gaining traction in New Hampshire will hurt car dealers, increase costs for consumers and potentially spark a legal battle.

By Jim Haddadinjhaddadin@fosters.com

DOVER — Auto manufacturers are warning that a bill gaining traction in New Hampshire will hurt car dealers, increase costs for consumers and potentially spark a legal battle.

The bill would revamp the laws that govern the relationship between car makers and car dealers in the state. It passed with overwhelming support last week in the Senate on a 21-2 vote, and will now head to the House for debate.

In state capitals across the country, franchise laws are routinely amended to address concerns that crop up. However, representatives from the Alliance of Automobile Manufacturers say the bill pending in Concord would give car dealers unprecedented new privileges.

AAM's communications director, Daniel Gage, and the group's state affairs director, Laura Dooley, recently laid out some of the manufacturers' concerns during a meeting with the Editorial Board of Foster's Daily Democrat.

AAM represents 12 auto manufacturers, whose products comprise 77 percent of all car and light truck sales in the United States. Members include Chrysler, Ford, General Motors, Toyota, Volkswagen and BMW.

The manufacturers argue they're willing to compromise with dealers over business practices, but Senate Bill 126 — the legislation at hand — is a government overreach that will result in bad public policy.

“Our goal in any franchise bill that is proposed is to find some sort of balance — find some sort of harmony,” Dooley said. “The proposals that we push back on are the things that we push back on everywhere, and what we're finding in New Hampshire specifically is we're not making any headway to bring the New Hampshire provisions back into the general fold that we see in other states.”

Dubbed a “bill of rights” for auto dealers, SB126 comes after a tumultuous period in the industry. Several local auto dealers were shuttered in 2008 and 2009, as the country's big three domestic automakers struggled to stay afloat. Gage said the upheaval created a political opening for local car dealers.

“There's still ill will,” he said, “and they've used that environment to capitalize, I think, here, and in our view, go beyond what is balanced and fair.”

One common grievance among local car dealers is the burden of upgrading their showrooms and service centers to comply with manufacturer programs. The bill would prevent manufacturers from inducing their dealers to make facility changes more than once every 15 years.

AAM is willing to negotiate on the issue, Dooley said, but a 15-year moratorium goes “well beyond” any industry standard the alliance has ever encountered, she said. Dooley pointed out that many facility upgrades are voluntary, and others don't come at the full cost of the dealer. The group is pushing for a compromise of seven years — a guideline used in some other states.

For manufacturers, consistency in branding is often the motivating factor behind asking dealers to change sales and service facilities. Dooley said AAM members fear another provision in the New Hampshire law could chip away at that consistency. It would allow dealers to use their own signs — a move she called “inappropriate.”

“There's nothing to stop them from a going to a junkyard and buying a sign that Ford made in 1953 and hanging it over their door ...” Dooley said. “Our companies put time and design elements into what their brand looks like, what their logo looks like.”

Another proposal drawing criticism would reduce the time window available for auto manufacturers to audit their incentive and reimbursement programs. The bill would grant automakers only six months to audit records after claims are paid out. Other states have adopted a 12-month cap, Dooley said.

Automakers are also pushing back on a portion of the bill that would prevent them from surcharging New Hampshire auto dealers to compensate for higher parts and labor costs. AAM has developed a “national litigation strategy” to tackle the issue in states that have adopted similar laws, Gage said. One such state is Florida, where a lawsuit on the issue is still being adjudicated.

Another provision — which requires car manufacturers to provide documentation to dealerships upon request — could also wind up in litigation, according to Gage and Dooley.

SB126 would give car dealers the right to request a copy of their so-called “dealer file” once each year. The file would need to include any paper or electronic documents “concerning” the dealer. Such information would include sales performance data, market studies and reports about facility issues and employee matters.

But AAM argues the language in the bill so broad that car dealers could request anything they desired — even proprietary information, such as the computer codes used to program vehicles.

The New Hampshire chapter of the Automobile Dealers Association has indicated it isn't willing to compromise on the language, Gage said, even though the manufacturers have flagged the dealer file provision as a “non-starter.”

“Our manufacturers strongly feel that the dealer file language is so unique ... and essentially outrageous that it could warrant litigation,” Dooley said.

Without changes, the bill approved by the Senate last week will hurt consumers because it will force the manufacturers to compensate for higher costs with higher vehicle prices, Gage said.

“Our position is that this bill in New Hampshire just goes too far,” he said, “and the end result is a bunch of unintended consequences for the consumer.”